Guest Post: Ka-Ching! How to Make 'Mobile Wallet' A Winner

Source: Square

A woman walks down High Street on her lunch hour. Passing a bus kiosk, she waves her Samsung Galaxy at a “smart poster” to download coupons. Minutes later she enters a favorite eatery, orders lunch, and flashes her phone at a point-of-sale device to “cash in” a discount on her entree. On the bus ride back to the office, she uses her smart phone to pay the fare.

Welcome to the center of the mobile wallet universe — not New York, London or Tokyo, but Seoul, South Korea — where up to three million customers use their smart phones for “contactless payment.” Provided by KT and SK Telecom, Korea’s mobile wallet services are the vanguard of one of the hottest trends in mobility: “near field communications” (NFC), a communications standard widely viewed as the platform that will transform smart phones into mobile wallets.

With millions of consumers lining up to add this new app and ditch “plastic” and cash purchases, mobile wallet is catching on worldwide. The phenomenon is expected to jump to Europe next, where telecom operators say they will offer NFC-based mobile wallet services in the U.K., Turkey, Poland, France, Spain, and in Germany in 2012. In the United States, Isis — the mobile wallet joint venture of AT&T, Verizon and T-Mobile — may launch in its first two markets, Salt Lake City and Austin, sometime in the second quarter, followed by a major national roll out in 2013.

What’s attracting the world’s largest telecom companies? Simply the next bonanza in mobility and the Internet. Gartner Group predicts that by 2015 mobile wallet services will spawn 349 million users and fuel a $429 billion market.

With a common standard guaranteeing ease of use for consumers and simple, low cost deployment for merchants, that rosy prospect looks realistic. If there’s a catch, it may be the “detail” that observers in the industry only whisper about: the threat to network reliability under a crush of new mobile wallet traffic.

Fear of a bandwidth crunch is a valid concern. While South Korea’s mobile wallet ventures are a great success, and are the hoped-for microcosm of the future, they must be put in perspective. Three million happy mobile wallet customers are an insignificant quantity to the engineers and architects charged with designing robust, fail-safe networks in major markets. What keeps them up nights: pondering how to manage trillions of mobile transactions when mobile wallet goes live in venues the size of the United States, China, and Japan.

The last thing anyone wants is a repeat of the network slowdowns experienced in the early days of smart phones and streaming video. Mobile wallet transactions must happen in real time. Otherwise, confidential data may be compromised.

Fortunately, such mishaps now can be a thing of the past thanks to an advance on par with NFC itself: Policy and Charging Control. Already in use by leading mobile operators to prioritize communications traffic on their networks, policy control lets carriers set rules that determine which messages go first and have the highest “quality of service” or QoS.

First proving its value by resolving a problem that plagued mobile operators last year - a consumer backlash to “mobile bill shock” – policy and charging control systems today notify customers before they exceed their data usage limit, preventing coronary-inducing bills. The software also constrains broadband hogs so that all customers have access to the bandwidth they pay for.

The same innovation now can help mobile operators put mobile wallet transactions in the fast lane, ensuring rapid, prioritized message handling — and the high levels of customer satisfaction essential to any new service’s success.

Bob Lento is President of Convergys, Smart Revenue Solutions, which enables communications service providers to monetize their services supported by innovative billing, customer care and real-time charging and policy solutions.